Will PCs Remain A Bargain?

Even with rising energy costs, which are in turn pushing up shipping charges, PC manufacturers aren't likely to jump to raise prices. Instead, they may consider other ways to pass on costs.

Hurricanes have driven up energy prices in the United States, but they have yet to brush up against the PC industry.

Now that the fourth quarter is under way, PC manufacturers have much to look forward to. The quarter is typically the busiest of the year, thanks to holiday sales to consumers and corporate spend-it-or-lose-it budgets. The largest brand-name companies, including Dell Inc., as well as Hewlett-Packard Co. and Gateway Inc., have all launched new consumer PC lines of late. The companies continue to offer aggressively priced models starting at roughly $250 to $350 for a desktop, after rebates, and about $500 to $600, after rebates, for notebooks, according to an informal survey by Ziff Davis Internet.

Beginning prices for SMB (small and midsize business)-oriented PCs, which are generally slightly higher, range from about $350 to $400 for a desktop, and start around $700 for a notebook. The companies also target high-end consumers with machines like Dell's multi-thousand dollar XPS models.

Despite appearing to have little to no effect on the latest batch of consumer PCs or, for that matter, on prices of corporate machines, to date, energy prices are starting to worry some in the industry.

Consumers and businesses are paying more for fuelwith the average price for a gallon of gasoline hovering around $3and, with winter coming, face higher heating costs in many areas of the country as well. Those higher costs raise the prospect of at least some consumers and businesses deferring PC purchases. At the same time, shipping costssomething PC makers must either eat or pass on to customershave gone up across the board, due to higher fuel costs, an executive at Hewlett-Packard Co. said.

"People aren't likely to be deterred from buying something because they're spending an extra couple hundred dollars on gas," said Steve Baker, analyst with NPD Group. However, "The wild card [for retailers and PC makers] is things like cost of distribution and turning on the lights."

Indeed, "We are starting to see some incremental costs in transportation, overall, in our cost structure," said Sam Stzeinbaum, general manager for HP's North America Consumer Computing Business.

The rising shipping costs, which include higher bills for air freight and increases in ground shipping rates, are not considered to be significant yet, Stzeinbaum said. Although he said rising transportation costs can squeeze profit margins.